Ex-World Bank chief sees rise in class conflicts

Business World, March 6, 2008

A WIDENING rich-poor gap in countries around the world could lead to a rise in class conflicts, former World Bank president James Wolfensohn yesterday said.

Mr. Wolfensohn, in Manila for a Bridges: Dialogues Towards a Culture of Peace forum, made the comment as the government yesterday announced that the number of Filipino poor had increased.

The National Statistical Coordination Board yesterday reported that poverty incidence had risen to 26.9% as of 2006, up a little over two percentage points from 2003’s to 21.4%.

“The figures indicate that the Philippines has not done much in reducing poverty’ Mr. Wolfensohn said. This, he told reporters, was “something that you should be concerned about.”

He said told the forum that despite sharp growth in countries like China and India, the absolute number of poor in the world was still growing, particularly in Africa.

Fifteen years ago, there were about five billion poor people in the world — a number that “will grow to eight billion people in the next five years,” he said.

The increasing income disparity between nations and within their borders “will ensure you will have growing conflicts between the rich and the poor”, he told business and civic leaders.

Unlike in the past, the poor in undeveloped countries are well- informed and know about the comforts and jobs out of their reach. “Young people want to get jobs and if they can’t get jobs, they will go out and kick you’ he said. “If you want your kids to live in peace, you cannot ignore this problem.”

The key to equity, he said, has been demonstrated by more progressive countries, which increased allocations for health care and education.

The Philippines’, said Mr. Wolfensohn, is only one-eighth to one-tenth of the amounts other countries spend.

PHINMA Corp. Chairman Ramon K. del Rosario, Jr., reacting to Mr. Wolfensohn in yesterday’s forum, said good governance is also a requirement in the anti-poverty fight.

“It is not only policy that matters. Governance is equally important for us to see sustainable development,” he said. “Poor governance ... [leads to] poor spending choices that limit the avenues for the poor to improve themselves.”

Mr. Wolfensohn, who is credited with anti-corruption efforts at the World Bank, criticized the weak record of developed countries in channelling aid to the needy.

“Shareholder governments of multilateral institutions have done a terrible job of [using] the money for development,” he said.

Mr. Wolfensohn said of the US$130 billion supposedly allocated by multilateral institutions for development, only one-third of that amount was used to help the poor while the rest went to overhead and other costs.

“The system is in poor shape and needs a revamp,” he said, suggesting that they should “get rid of multiple organizations with multiple overheads” that perform the same functions.

AFP with a report from GSDP